THE SOCIAL SECURITY ADMINISTRATION’S
WAGE RECONCILIATION PROCESS WITH
THE INTERNAL REVENUE SERVICE

June 2009

A-03-08-18069

AUDIT
REPORT

Mission

By conducting independent and objective audits, evaluations and investigations, we inspire public confidence in the integrity and security of SSA’s programs and operations and protect them against fraud, waste and abuse. We provide timely, useful and reliable information and advice to Administration officials, Congress and the public.

Authority

The Inspector General Act created independent audit and investigative units, called the Office of Inspector General (OIG). The mission of the OIG, as spelled out in the Act, is to:

 Conduct and supervise independent and objective audits and investigations relating to agency programs and operations.
 Promote economy, effectiveness, and efficiency within the agency.
 Prevent and detect fraud, waste, and abuse in agency programs and operations.
 Review and make recommendations regarding existing and proposed legislation and regulations relating to agency programs and operations.
 Keep the agency head and the Congress fully and currently informed of problems in agency programs and operations.

To ensure objectivity, the IG Act empowers the IG with:

 Independence to determine what reviews to perform.
 Access to all information necessary for the reviews.
 Authority to publish findings and recommendations based on the reviews.

Vision

We strive for continual improvement in SSA’s programs, operations and management by proactively seeking new ways to prevent and deter fraud, waste and abuse. We commit to integrity and excellence by supporting an environment that provides a valuable public service while encouraging employee development and retention and fostering diversity and innovation.

MEMORANDUM

Date: June 16, 2009 Refer To:

To: The Commissioner

From: Inspector General

Subject: The Social Security Administration's Wage Reconciliation Process with the Internal Revenue Service (A-03-08-18069)

OBJECTIVE

Our objective was to assess the effectiveness of the Social Security Administration (SSA) and Internal Revenue Service’s (IRS) reconciliation process in correcting SSA’s earnings records.

BACKGROUND

SSA seeks to ensure Federal Insurance Contributions Act (FICA) reports of Social Security and Medicare wages are received timely and are accurately recorded on the Master Earnings File (MEF). To help accomplish this, SSA and IRS records are compared annually in a process known as the Annual Wage Reporting (AWR) reconciliation. Each quarter, employers are required to report to the IRS the total wages paid using the Employer’s Quarterly Federal Tax Return (Form 941). Employers are also required to report wages annually to SSA via Wage and Tax Statements (Form W-2) and the Transmittal of Income Tax Statements (Form W-3). SSA’s Earnings Modernization (EM) 1.5, receives the quarterly Form 941 data from the IRS, totals the data by tax year (TY), and compares that total to the total of Forms W-2 processed by SSA for that employer for the TY. The system identifies those employers whose (1) totals match, (2) IRS totals exceed SSA totals, and (3) SSA totals exceed IRS totals. If the FICA and Medicare wages reported to both agencies agree, no action is necessary. If the wages differ, both agencies must resolve the differences.

SSA Reconciliation Process

When more wages are reported to the IRS than to SSA, employees’ wages may not be credited correctly to SSA’s records. SSA examines these cases and attempts to resolve the difference without contacting the employer. When an effort to resolve the discrepancy is unsuccessful or a resolution is not possible without employer assistance, the reconciliation system generates notices and questionnaires that are mailed to employers requesting additional information that could help resolve the discrepancies. In November of the year following a given TY, SSA begins mailing notices to employers whose reports for the given TY are discrepant or missing. A discrepant case is when SSA-processed wages are lower than IRS wage amounts, and the difference is greater than the value of a Social Security credit, also known as a quarter of coverage (QC). A missing case is when IRS-processed wages are greater than a QC, and SSA has no record of an employer report for the given TY. If SSA does not receive a response from employers after 120 days or the discrepancy remains, SSA sends employers a second notice.

SSA considers a case to be resolved when it receives additional information from the employer that raises the SSA wage report amount to an amount equal to or greater than the IRS wage reports, regardless of whether the identifying information enables posting the corrected wage amounts to an individual earnings record. When no response is received after the two notices or the discrepancy is not resolved, SSA will refer cases to the IRS for resolution. The Internal Revenue Code allows the IRS to penalize an employer if it fails to file a complete and accurate wage report form.

IRS Reconciliation Process

When more wages are reported to SSA than to the IRS, the IRS will investigate the discrepancy to determine whether the employer underpaid the Social Security tax. If so, the IRS will assess the additional tax due.

SCOPE AND METHODOLOGY

To perform our review, we obtained the TY 2005 AWR reconciliation file as of March 2008. Our review of the file showed that SSA had reconciled FICA and Medicare wages for approximately 6.9 million employers who submitted approximately 245 million Forms W-2. Furthermore, the file showed SSA had processed Forms W-2 that included approximately $4.5 trillion in FICA wages and tips and $5.4 trillion in Medicare wages, while the IRS had processed Forms 941 that included approximately $4.5 trillion in FICA wages and tips and $5.5 trillion in Medicare Wages.

Our review focused on those employers who reported less FICA and Medicare wages to SSA, since these cases represent SSA’s reconciliation workload. Whereas this review focused on wage reporting at the employer level, we have several planned audits that will focus on the wage reporting process at the employee level, to determine the accuracy of the information posted to SSA’s records. For example, we have a review planned that will examine fraudulent, overstated, and/or missing wages posted to SSA’s MEF.

RESULTS OF REVIEW

The effectiveness of SSA’s reconciliation process could be improved. We determined that for TY 2005, SSA could not resolve the reconciliation difference for about 248,000 (49 percent) of the 508,000 employers who reported less FICA and Medicare wages to SSA. This occurred because

• 140,281 employers did not respond to SSA’s reconciliation notices;
• 40,921 employers were not provided a reconciliation notice;
• 33,695 employers did not receive the reconciliation notices; and
• 32,791 employers responded to the reconciliation notices; however, they provided wage information that did not resolve the discrepancy.

The 248,000 employers underreported to SSA approximately $31 billion in FICA wages and tips and $38 billion in Medicare wages. Among the 248,000 employers, we determined that:

• 155,000 employers did not report any wages to SSA but had reported about $8.4 billion in FICA wages and tips and $9 billion in Medicare wages to the IRS. We estimate that the underreported wages could potentially relate to about 464,000 employees who did not receive credit for their wages, and

• 2,081 employers underreported $18.4 billion (59 percent) of the $31 billion in FICA wages. We estimate that the underreported wages could potentially relate to about 951,000 employees who did not receive credit for their wages.
If these employees do not receive proper credit for their wages in SSA’s records, their rights to future Social Security benefits or their benefit amount may be affected.

Additionally, we determined SSA had added, deleted, or changed FICA wage amounts on Forms W-2 for approximately 32,000 employers. These changes contributed to the 32,000 employers underreporting about $28 billion in FICA wages to both SSA and the IRS. Given that SSA did not inform employers about the internal adjustments made to their wages, there is an increased risk these employers would not be able to resolve the reconciliation discrepancies.

IRS RECONCILIATION CASES

Our review of the TY 2005 AWR reconciliation found that only 2.1 million (31 percent) of the 6.9 million employers reported the same amount of FICA and Medicare wages to both SSA and the IRS (see Figure 1). These employers reported about $171 billion in FICA wages and tips and $207 billion in Medicare wages to both agencies. Additionally, we found that 4.3 million employers reported more FICA and Medicare wages to SSA than to the IRS. Specifically, we found the following.

• About 3.9 million employers (56 percent) reported more FICA and/or Medicare wages to SSA, but the difference for each employer was less than $100. Overall, they underreported to the IRS approximately $7.9 million in FICA wages and tips and $7.7 million in Medicare wages. Because the difference was not substantial for these employers, it is less likely the IRS would investigate these cases.

• About 363,000 employers (5 percent) reported more FICA and/or Medicare wages to SSA, and the difference for each employer exceeded $100. These employers reported about $33.6 billion more in FICA wages and tips and $41 billion more in Medicare wages. On average, the difference was about $92,000 in FICA wages, $800 in FICA tips, and $113,000 in Medicare wages for the employers. Among the 363,000 employers were 17,275 employers who reported $100,000 to $5 billion more in FICA wages to SSA. The IRS routinely investigates these cases because they could represent instances where employers underpaid employment taxes. However, we did not review the status or outcome of the IRS’s efforts.
SSA RECONCILIATION CASES

We determined that for TY 2005, SSA could not resolve the reconciliation difference for 248,000 (49 percent) of the 508,000 employers who reported less FICA and Medicare wages to SSA than to the IRS (see Figure 2). This occurred mainly because either SSA’s reconciliation notices did not reach the intended employers or employers did not respond to the notices. The 248,000 employers underreported to SSA approximately $31 billion in FICA wages and tips and $38 billion in Medicare wages, which in some cases could affect their employees’ rights to future Social Security benefits or the benefit amount.

Resolved SSA Reconciliation Cases

SSA’s reconciliation system identified about 508,000 cases where employers had reported less FICA and/or Medicare wages to SSA than to the IRS and the wages were greater than the TY 2005 QC, which was $920. These employers reported to SSA approximately $80.6 billion less in FICA wages and tips and $95 billion less in Medicare wages. SSA investigated most of the cases to determine whether employers had failed to submit Forms W-2 for their employees. In some instances, SSA’s in house examination of the cases did not determine whether the discrepancies resulted from common reporting errors, such as omitting a decimal point, or reporting non FICA wages as FICA wages. Therefore, SSA sent notices to employers requesting their assistance to resolve the discrepancies. As a result of the Agency’s efforts, it resolved the reconciliation difference for about 260,000 (51 percent) of the 508,000 employers. However, 248,000 cases remained unresolved.

Unresolved SSA Reconciliation Cases

SSA was not able to resolve the reconciliation difference for about 248,000 (49 percent) of the 508,000 employers who reported approximately $31 billion less in FICA wages and tips and $38 billion less in Medicare wages to the Agency. About 155,000 of the 248,000 employers did not report any wages to SSA but had reported about $8.4 billion in FICA wages and tips and $9 billion in Medicare wages to the IRS. On average, each employer had reported about $54,000 in FICA wages and $57,000 in Medicare wages. Although the amount of FICA wages reported by each employer was not significant, given that they did not report these wages to SSA, none of their employees received credit for the FICA wages. We estimate that about 464,000 employees could potentially be impacted by the missing wages.

The remaining 93,000 employers had reported FICA and Medicare wages to both agencies but had reported about $22.5 billion less in FICA wages and tips and $29 billion less in Medicare wages to SSA. We determined that 2,081 of these employers had underreported $18.4 billion (59 percent) of the $31 billion in FICA wages. On average, the 2,081 employers underreported $8.8 million in FICA wages to SSA. Although the underreported FICA wages could have resulted from incorrect processing of earnings reports by SSA and/or incorrect processing of tax payments by IRS, it also could have resulted from employers failing to submit a Form W-2 to SSA for their employees. While the actual number of missing Forms W-2 is unknown for the 2,081 employers, we estimate that the $18.4 billion in underreported FICA wages could potentially relate to about 951,000 employees who did not earn 4 QCs for TY 2005, which could affect their entitlement to Social Security benefits.

Cases Too Late for Reconciliation Development

Among the 248,000 unresolved cases were about 41,000 cases the Agency identified as being too late for development. SSA’s reconciliation system identified these cases as being too late because the employers reported wages to SSA or SSA made internal wage adjustments after June 2007, which was the cut-off date for the mass mailing of reconciliation notices for TY 2005. Therefore, SSA did not perform any reconciliation development for these cases, such as mailing notices to the employers to help resolve the $4 billion in FICA wages and tips and $4.6 billion in Medicare wages that were underreported. Furthermore, since these cases were deemed too late for development, they were not referred to the IRS for further investigation.

Non-Responses and Undeliverable Notices

The remaining 207,000 cases were not resolved because, in most instances, the employers did not respond to, or did not receive, the reconciliation notices SSA mailed to them. SSA sends employers a notice along with a questionnaire requesting that they provide the necessary wage information to resolve the reconciliation discrepancy. As shown in Table 1, about 68 percent of the employers did not respond to the notices, and 15 percent did not receive the notices because the notices were returned as undeliverable for invalid addresses. Although 16 percent of the employers responded to SSA’s notices, they provided wage information that did not resolve the discrepancy. In addition, less than 1 percent could not respond to the notices because they were deceased.

Table 1: Summary of Unresolved Reconciliation Cases
Reason for Unresolved
Reconciliation Cases Number of Employers Percent
No Response from Employer 140,281 68
Received Response from Employer but the Discrepancy Remained 32,791 16
Undeliverable – No Address Provided 30,119 15
Undeliverable with New Address Provided1 3,576 2
Undeliverable Due to Death of Employer 9 0
Total 206,776 1002
Notes:
1. A third party, to include the U.S. Postal Service, provided the new address. SSA sent the second reconciliation notice to the new address, but the cases remained unresolved.
2. Totals do not equal due to rounding.

SSA uses the address information provided by the IRS when mailing reconciliation notices to employers. The address information is recorded in SSA’s Employer Identification File (EIF), and the EIF serves as the main source for obtaining address information for employers. During our review, we found that employers’ current addresses were not always included in the EIF, and this may explain why SSA did not receive responses from the 30,119 employers whose notices were returned as undeliverable. In addition, it may explain why many of the 140,281 employers did not respond to the reconciliation notices. Moreover, according to SSA staff, when there is no response from employers within 120 days of the initial notice, the reconciliation system generates a second notice and sends it to the same address that appeared on the EIF although the initial notices were returned because of invalid addresses. Consequently, SSA unnecessarily spent resources mailing some of the second notices.

SSA staff stated they were aware the EIF did not always contain current addresses for employers. Since 2005, they have had discussions with the IRS to obtain the most current address information for employers. We asked SSA staff if they had considered using the address that appears on the Form W-3 to contact the employer as it might contain a more current address. SSA staff stated that they do not compare the Form W-3 address for the employer to the address that appears in the EIF as part of the reconciliation process. Furthermore, they stated the address is only captured on the Form W-3 for those employers who submit their wages electronically to SSA. The employer’s address is not captured in SSA’s system for those employers who submit their wages via paper. Since the Form W-3 may contain a more current address for the employer, we believe SSA should compare the Form W-3 address to the address that appears in the EIF, and if they are not the same, use the Form W-3 address to mail the second notices to employers with the most egregious wage reporting discrepancies. Additionally, the Agency should determine whether it would be feasible for it to notify employers electronically about their reconciliation discrepancies. For example, the Agency could send notices via emails through a secure web access. In addition, the Agency could upload an electronic version of the reconciliation notices on its Business Services Online (BSO) for those employers who submit their wage reports electronically. We believe these additional steps could help reduce the number of notices that are returned as well as the number of non-responses, which should help increase the percentage of reconciliation cases that are resolved.

THE IMPACT OF WAGE ADJUSTMENTS ON THE RECONCILIATION PROCESS

We determined SSA did not always inform employers about internal adjustments it made to employers’ wages, which led to the imbalance of FICA and Medicare wages reported to both SSA and the IRS. We found that SSA had added, deleted, or changed the FICA wage amounts on Forms W-2 for about 32,000 employers, which contributed to about 17,000 employers reporting $12.6 billion less in FICA wages to SSA—averaging about $759,000 per employer—and about 15,000 employers reporting about $15.3 billion less in FICA wages to the IRS—averaging about $998,000 per employer (see Table 2).

Usually, these internal wage adjustments occur when an individual reports overstated or missing wages on their record. SSA staff reviews the supporting Form W-2 and makes a determination on the specified wages. If SSA agrees with the claim, the wages are added to, or deleted from, the individual’s record using the Item Correction system, which enables appropriate SSA staff to correct an individual’s MEF record.

Affected employers may not be aware of these adjustments and their impact on their reconciliation balance because SSA rarely informs them about the internal wage adjustments. We have reported that SSA staff seldom sends letters to employers informing them of certain internal adjustments (wages removed from a numberholder’s earnings record because they were disclaimed) made using Item Correction. As a result, affected employers may not be able to resolve the reconciliation imbalance because SSA did not make them aware of the internal adjustments. For example, among the 17,000 employers who did not resolve their reconciliation discrepancies with SSA were about 13,000 employers who either did not respond to SSA’s reconciliation notices or did respond, but provided wage information that did not resolve the discrepancy. We believe SSA needs to inform employers about internal wage adjustments that will affect employers’ reconciliation balances. Making employers aware of these adjustments will be beneficial to both SSA and the employers.

FUTURE ENHANCEMENTS TO THE RECONCILIATION PROCESS

The Agency plans to make future enhancements to the AWR reconciliation process to help eliminate some of the manual processes, which can be error-prone and time consuming. The Unified Earnings Corrections (UEC) process will be a newly developed application that will consolidate many of SSA’s legacy earnings corrections and related systems to include the SSA/IRS reconciliation system. As it relates to the SSA/IRS reconciliation process, SSA expects that the development of the UEC will eliminate much of the manual intervention required to perform earnings corrections and increase the process of earnings data reconciliation. As part of the UEC, SSA plans to make the following changes to the SSA/IRS reconciliation process.

• Redirect paper reconciliation responses from Metro West to the Wilkes-Barre Data Operations Center (WBDOC). Currently, reconciliation responses are returned to Metro West for manual processing. With the development of the UEC application, SSA will send the paper responses directly to WBDOC for processing to allow forms to be scanned in a more timely fashion, using the current procedures and tools for processing submissions.

• Scan and store paper reconciliation responses. The reconciliation notice responses and related materials (that is, Forms W-2, Forms W-3, completed reconciliation questionnaires, and Forms 941) will be scanned and stored so they can be queried and retrieved by other applications and SSA staff who process the reconciliation cases. Furthermore, it is expected that when fully implemented, this process will eliminate the need for a clerk to read the data from a form and manually enter the data, thus reducing errors in keying and speeding up corrections that require human intervention and analysis to close a reconciliation case.

SSA staff informed us that any new UEC application software enhancements related to the SSA/IRS reconciliation process is at least 3 or 4 years away from implementation.

CONCLUSION AND RECOMMENDATIONS

Our audit found that about 49 percent (248,000) of SSA reconciliation cases for TY 2005 remained unresolved because the employers (1) did not respond to SSA’s reconciliation notices; (2) were not provided a reconciliation notice; (3) did not receive the reconciliation notices; or (4) responded to the reconciliation notices; however, they provided wage information that did not resolve the discrepancy. As a result, billions of dollars in FICA and Medicare wages were underreported to SSA. Among the 248,000 employers, were 155,000 employers who failed to report about $8.4 billion in FICA wages to SSA and 2,081 employers who underreported about $18.4 billion in FICA wages to SSA. To ensure that SSA uses its resources efficiently, we believe the Agency should implement our recommendations for those employers with the most egregious wage reporting discrepancies, such as missing wages or significant discrepant wages. Lastly, we believe SSA needs to take steps to inform employers about the Agency’s internal wage adjustments because the adjustments may affect employers’ reconciliation balances.

Accordingly, we recommend SSA:

1. Continue to work with the IRS to obtain current address information for employers.
2. Consider capturing the addresses of employers who submit paper wage reports on the Form W 3. This will allow SSA to have an updated address for the employer if there is a need to correspond with the employer.
3. Compare the employer address that appears on the Form W-3 to the address that appears on the EIF for the employer and if they are not the same, use the Form W-3 address to mail the second notice to employers.
4. Evaluate the feasibility of notifying employers electronically about reconciliation discrepancies to help minimize the number of reconciliation notices that are returned as undeliverable and the number of non-responses.
5. Establish a process to inform employers about internal wage adjustments that will affect an employer’s reconciliation balance.

AGENCY COMMENTS

SSA agreed with our recommendations. The full text of the Agency’s comments is included in Appendix E.

• Reviewed applicable Federal law, Social Security Administration (SSA) policy and procedures, and prior Treasury Inspector General for Tax Administration audits related to the SSA/Internal Revenue Service (IRS) reconciliation process. In addition, we reviewed an Office of Quality Assurance and Performance Assessment evaluation study of the reconciliation process.

• Reviewed the agreement between SSA and the IRS that sets forth the manner by which SSA and the IRS will ensure the Combined Annual Wage Reporting is effectively and efficiently maintained.

• Met with staff from the Division of Earnings Corrections and Use to determine the composition of the SSA/IRS reconciliation file for Tax Year (TY) 2005. Obtained from SSA, the SSA/IRS reconciliation file for TY 2005 and determined there were approximately 6.9 million employer records in the file.

• Obtained and reviewed a data extract that included reconciliation notice information for TY 2005.

• Obtained and reviewed a data file that contained about 207,000 reconciliation cases that were referred to the IRS for TY 2005.

• Obtained and reviewed a data extract from the Master Earnings File of earnings records where wages were manually adjusted by SSA staff through the Item Correction system.

• Met with staff from the Division of Employer Services to obtain a walk-through of the reconciliation process and gain an understanding of how the individual reconciliation cases are tracked within the Earnings Modernization 1.5 system.

We found data used for this audit were sufficiently reliable to meet our audit objectives. The entity responsible for the maintenance of the SSA/IRS reconciliation file is the Office of Earnings, Enumeration and Administrative Systems under the Deputy Commissioner for Systems. On the operations side, the Office of Central Operation’s Division of Employer Services is responsible for resolving wage reporting discrepancies between the IRS and SSA resulting in more accurate accounting. Our work was conducted at the Philadelphia Audit Division, Philadelphia, Pennsylvania, between June 2008 and February 2009. We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Appendix C
First Reconciliation Notice Sent to Employers

Appendix D
Second Reconciliation Notice Sent to Employers

Appendix E
Agency Comments

MEMORANDUM

Date: June 5, 2009 Refer
Refer To: S1J-3

To: Patrick P. O'Carroll, Jr.
Inspector General

From: James A. Winn /s/
Chief of Staff

Subject: Office of the Inspector General (OIG) Draft Report, “Review of Social Security Administration’s Wage Reconciliation Process with the Internal Revenue Service”
(A-03-08-18069)--INFORMATION

Thank you for the opportunity to review and comment on the draft report. We appreciate OIG’s efforts in conducting this review. Attached is our response to the report recommendations.

Please let me know if we can be of further assistance. Please direct staff inquiries to
Ms. Candace Skurnik, Director, Audit Management and Liaison Staff, at (410) 965-4636.

We have a cross-component workgroup that is evaluating earnings-related issues. This workgroup has been reviewing several of the specific issues that you raised in your recommendations. Our responses to your recommendations are as follows.

Recommendation 1

Continue to work with the Internal Revenue Service (IRS) to obtain current address information for employers.

Comment

We agree. We will continue working with IRS to obtain the most current address information for employers.

Recommendation 2

Consider capturing the addresses of employers who submit paper wage reports on the Form W-3. This will allow SSA to have an updated address for the employer if there is a need to correspond with the employer.

Comment

We agree. This method will require us to change our current Wilkes-Barre Data Operations Center process of capturing and submitting the information to the Annual Wage Reporting Batch System. We will consider the necessary system enhancement along with other competing priorities. Along with a system enhancement, this process will require more workyears to scan and key the additional data.

Recommendation 3

Compare the employer address that appears on the Form W-3 to the address that appears on the Employer Identification File (EIF) for the employer and if they are not the same, use the Form W-3 address to mail the second notice to employers.

Comment

We agree. We will explore a system enhancement that compares the address on the Form W-3 with the address on the EIF, and if they are not the same, to utilize the Form W-3 address to mail the second notice. Nevertheless, only 30 percent of employers submit Form W-3 for reconciliation cases. When an employer does not submit a paper Form W-3, we create a
“dummy” Form W-3 to include only the employer identification number, employer name, and wage total. Additionally, if we were to receive a greater number of Forms W-3 directly from an employer, it is neither feasible nor cost-effective for us to conduct a manual comparison of the Form W-3 and the EIF because of the stringent reconciliation processing deadlines.

Recommendation 4

Evaluate the feasibility of notifying employers electronically about reconciliation discrepancies to help minimize the number of reconciliation notices that are returned as undeliverable and the number of non-responses.

Comment

We agree. We will explore ways to capture e-mail addresses of paper filers. We currently have plans to develop a new application called the Earnings Case Management System (ECMS), which would notify employers electronically about reconciliation discrepancies. The ECMS application software is at least 3 to 4 years away from a formal proposal, resource allocation, and program specifications.

Recommendation 5

Establish a process to inform employers about internal wage adjustments that will affect an employer’s reconciliation balance.

Comment

We agree. We will explore the feasibility of a systems application to generate a notice to employers about internal wage adjustments.

Appendix F
OIG Contacts and Staff Acknowledgments
OIG Contacts

Cylinda McCloud-Keal, Director, Philadelphia Audit Division

Carol Madonna, Audit Manager

Acknowledgments

In addition to those named above:

Frank Trzaska, Auditor-in-Charge

Richard Devers, IT Specialist

For additional copies of this report, please visit our web site at www.socialsecurity.gov/oig or contact the Office of the Inspector General’s Public Affairs Staff Assistant at (410) 965-4518. Refer to Common Identification Number
A-03-08-18069.

DISTRIBUTION SCHEDULE

Commissioner of Social Security
Office of Management and Budget, Income Maintenance Branch
Chairman and Ranking Member, Committee on Ways and Means
Chief of Staff, Committee on Ways and Means
Chairman and Ranking Minority Member, Subcommittee on Social Security
Majority and Minority Staff Director, Subcommittee on Social Security
Chairman and Ranking Minority Member, Committee on the Budget, House of Representatives
Chairman and Ranking Minority Member, Committee on Oversight and Government Reform
Chairman and Ranking Minority Member, Committee on Appropriations, House of Representatives
Chairman and Ranking Minority, Subcommittee on Labor, Health and Human Services, Education and Related Agencies, Committee on Appropriations,
House of Representatives
Chairman and Ranking Minority Member, Committee on Appropriations, U.S. Senate
Chairman and Ranking Minority Member, Subcommittee on Labor, Health and Human Services, Education and Related Agencies, Committee on Appropriations, U.S. Senate
Chairman and Ranking Minority Member, Committee on Finance
Chairman and Ranking Minority Member, Subcommittee on Social Security Pensions and Family Policy
Chairman and Ranking Minority Member, Senate Special Committee on Aging
Social Security Advisory Board

Overview of the Office of the Inspector General
The Office of the Inspector General (OIG) is comprised of an Office of Audit (OA), Office of Investigations (OI), Office of the Counsel to the Inspector General (OCIG), Office of External Relations (OER), and Office of Technology and Resource Management (OTRM). To ensure compliance with policies and procedures, internal controls, and professional standards, the OIG also has a comprehensive Professional Responsibility and Quality Assurance program.
Office of Audit
OA conducts financial and performance audits of the Social Security Administration’s (SSA) programs and operations and makes recommendations to ensure program objectives are achieved effectively and efficiently. Financial audits assess whether SSA’s financial statements fairly present SSA’s financial position, results of operations, and cash flow. Performance audits review the economy, efficiency, and effectiveness of SSA’s programs and operations. OA also conducts short-term management reviews and program evaluations on issues of concern to SSA, Congress, and the general public.
Office of Investigations
OI conducts investigations related to fraud, waste, abuse, and mismanagement in SSA programs and operations. This includes wrongdoing by applicants, beneficiaries, contractors, third parties, or SSA employees performing their official duties. This office serves as liaison to the Department of Justice on all matters relating to the investigation of SSA programs and personnel. OI also conducts joint investigations with other Federal, State, and local law enforcement agencies.
Office of the Counsel to the Inspector General
OCIG provides independent legal advice and counsel to the IG on various matters, including statutes, regulations, legislation, and policy directives. OCIG also advises the IG on investigative procedures and techniques, as well as on legal implications and conclusions to be drawn from audit and investigative material. Also, OCCIG administers the Civil Monetary Penalty program.
Office of External Relations
OER manages OIG’s external and public affairs programs, and serves as the principal advisor on news releases and in providing information to the various news reporting services. OER develops OIG’s media and public information policies, directs OIG’s external and public affairs programs, and serves as the primary contact for those seeking information about OIG. OER prepares OIG publications, speeches, and presentations to internal and external organizations, and responds to Congressional correspondence.
Office of Technology and Resource Management
OTRM supports OIG by providing information management and systems security. OTRM also coordinates OIG’s budget, procurement, telecommunications, facilities, and human resources. In addition, OTRM is the focal point for OIG’s strategic planning function, and the development and monitoring of performance measures. In addition, OTRM receives and assigns for action allegations of criminal and administrative violations of Social Security laws, identifies fugitives receiving benefit payments from SSA, and provides technological assistance to investigations.